BEIJING: Malaysian palm oil futures hit a nearly one-month low on Tuesday, falling for a third consecutive session on weak demand and concerns over growing stockpiles.
The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange slid 37 ringgit, or 0.95%, to 3,861 ringgit ($820.44) a metric ton by the midday break, its lowest since May 27.
“Weak exports and low demand from China, and a narrowing spread between palm oil and soy oil is putting pressure on the contract,” said Mitesh Saiya, trading manager at Mumbai-based trading firm Kantilal Laxmichand & Co.
Outlook on the contract is pessimistic due to growing concerns over stock levels, he added.
Indians bought a record 500,000 tons of sunflower oil for June delivery, as competition between leading suppliers Russia and Ukraine made it cheaper than soyoil and palm oil, two leading buyers and a customs official told Reuters.
Exports in June have been weak so far, with cargo surveyors estimating shipments from Malaysia dropping 8.1% and 12.9% from a month earlier.
Estimates for June 1-25 is scheduled to be released later in the day.
Fitch Ratings said it expects the contract to weaken from the second half of the year on higher global vegetable oil supply as better rainfall due to La Nina drive production, especially in larger producer Indonesia.
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“Spot prices have weakened after exceeding USD950 per ton in early April 2024, and Fitch assumes they will average USD775 per ton in 2024,” it said in a note.
Dalian’s most-active soyoil contract fell 1.1%, while its palm oil contract lost 1%. Soyoil prices on the Chicago Board of Trade were down 0.2%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market. Oil prices were little changed, as worries about China’s economic recovery prospects offset supply concerns stemming from tensions in the Middle East and Ukrainian attacks on Russian refineries.
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